How Britain could leave the EU

Unless
politicians, business leaders and trade unionists find the courage to make the
case for membership, it is only a matter of time until Britain leaves the EU.

Britain’s
departure from the EU grows ever more likely. David Cameron, the prime
minister, wants Britain to stay in. But he seems set on a path that could lead
to an exit. British withdrawal requires two conditions to be satisfied. First,
the government of the day must call a referendum on whether to leave the EU. Second,
a majority of voters must want to quit. The first condition seems likely to be met,
and the second is, for now, fulfilled.

Cameron will
probably go into the 2015 general election with a commitment to renegotiate the
terms of British membership and then hold a referendum on the outcome. The
British people would vote on whether to stay in the EU with the ‘better deal’
that he had negotiated, or leave.

The problem
with this strategy is that it assumes a significantly better deal is available.
Many senior Conservatives believe that, because Britain’s partners wish to keep
it in the club – and because they will need a British signature on the new EU
treaty that is likely to emerge around 2016 – they will offer treaty opt-outs.
The Conservatives will certainly try to pull out of EU labour market rules. They
will draw on the government’s review of EU competences, currently under way, for
ideas on other areas to withdraw from. (The government is already activating a
treaty article that allows it to opt out of many laws on police and judicial
co-operation.)

However, though
the other governments want Britain in the Union they will not grant it treaty
opt-outs. They worry that if Britain escaped labour market rules, which they
view as intrinsic to the single market, it would gain an unfair competitive
advantage. And if Britain could opt out of EU policies it disliked, others
would demand the same privilege: the French might exempt their car industry
from state aid rules, or the Poles spurn directives that force their
coal-centred economy to cut carbon emissions. In any case, if Britain blocked a
new EU treaty, the others would go ahead with another sort of treaty, just like
they did last December.

Cameron
could probably come home with a piece of paper promising a ‘better deal for
Britain’ – perhaps an agreement on reforming the working time directive, and
safeguards for the City of London and the single market. But Tory Eurosceptics
would see that the ‘better deal’ had failed to repatriate powers. They would campaign
for withdrawal in the referendum and split their own party.

Meanwhile
the Scots, who are more EU-friendly than the English, are due to vote on
independence in a referendum in 2014. Britain’s eurosceptic drift will help the
nationalists, whose best argument is that if the Scots stay shackled to the
United Kingdom they will be dragged out of the EU. They will argue that if the
Scots left Britain they could apply for EU membership and get in at about the
same time that the rest of the UK left it.

So why is
Cameron pursuing such a risky strategy? He has difficulty controlling his party:
on October 31, 53 Conservative MPs voted with the Labour Party (which saw a
chance of embarrassing Cameron) to defeat his EU budget strategy in the House
of Commons. Tory right-wingers dislike Cameron for being ‘moderate’, and not
only on the EU. They fear that the United Kingdom Independence Party (UKIP) –
which won more votes than the Conservatives in the Rotherham and Middlesborough
by-elections on November 29 – will steal enough votes to deprive the
Conservatives of a majority in the next general election. Cameron seems to
believe that only a referendum pledge can see off the UKIP threat, pacify hard-line
eurosceptics and strengthen his grip on his party.

Though
risky, Cameron’s strategy is not doomed to failure. Even if the better deal for
Britain turns out to be of little substance, a ‘Yes to the EU’ campaign fronted
by the leaders of the main parties plus many business and trade union leaders
could defeat the quitters.

The Labour
Party is less eurosceptic than the Conservatives. Paradoxically, however, a Labour
government could find it harder to keep Britain in the EU than a Tory one. In a
speech on November 18, Labour leader Ed Miliband said that with the EU in a
state of flux, it was the wrong time to talk of referendums on membership. Such
talk, he pointed out, could deter foreign investment in Britain.

But in the
run up to the general election, if a Conservative Party referendum promise seems
to be boosting its support, Miliband may find it hard to resist making a
similar pledge. Otherwise he would face taunts of elitism and of being scared
of the people.

Suppose that
Miliband wins the next election, having promised a referendum. He would
certainly call for ‘reform’ of the EU but could not credibly seek to repatriate
powers since Labour likes most of the things the EU does, especially labour
market rules. So a Labour government would hold an in-out referendum, midway
through a parliament when it was likely to be unpopular, when no better deal
had been negotiated, and when the Conservatives in opposition – with a new, more
eurosceptic leader – would probably campaign for withdrawal. The quitters could
well win such a referendum.

A British referendum
is probably three or four years away, but the trend of public opinion is
increasingly anti-EU. In recent years most opinion polls have shown a majority
for leaving the EU. The euro’s travails are one reason. For three years the
eurozone has lurched from crisis to crisis, with its leaders arguing over
piecemeal reforms that do not seem to have resolved its fundamental problems. All
this has been appalling PR for the EU.

And what
those leaders are doing -
centralising economic policy-making and talking of ‘political union’ - makes
the EU less congenial to the British. The more the EU moves beyond the relatively
limited economic club that the British joined, the more suspicious they become
of it. Recent developments such as the fiscal compact and the putative banking
union will not apply to the UK. But there is nevertheless a risk that the
countries in these clubs will caucus and try to impose their wishes on
outsiders such as Britain.

The EU’s
reputation has also been hit by the growing hostility of Britons to immigration
– although its rules on free movement do not affect Britain’s ability to
exclude non-EU citizens. People blame Brussels for the presence of so many
immigrants in the country. This has prompted Cameron to muse openly about
changing those rules.

Politicians
should not ignore public opinion. But they are partly responsible for the surge
of eurosceptic sentiment. For two decades Britain’s EU debate has been one-sided:
eurosceptic politicians and commentators have set the agenda, while few
politicians (or business leaders) have argued the merits of the EU. Pro-EU
politicians have seen the short-term advantages of saying little about an
unpopular subject. So they have lost the argument by default. Unless
politicians, business leaders and trade unionists find the courage to make the
case for membership, it is only a matter of time until Britain leaves the EU.

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